In the “bad cheque” scam, fraudsters want to steal funds out of a lawyer’s trust account.
Instead of robbing a bank, they try to trick lawyers into voluntarily paying out funds. The "bad cheque" scam, a type of social engineering fraud, involves tricking the lawyer into believing (wrongly) that real funds have been deposited into trust.
By posing as real clients, with real legal matters, they dupe a lawyer into depositing what appears to be a genuine certified cheque, bank draft or money order, or even a regular cheque, into trust. On the strength of that deposit, the lawyer then pays good funds out of trust. After the funds are gone, the lawyer discovers that the apparently good instrument is a well-made fake, leaving the lawyer’s trust account short, overdrawn or both. The details of the scam, including the method of payment, may change as scamsters work to create a story that seems entirely plausible.
More information and risk management tips relating to other social engineering scams, including phony changes in payment instructions, is available here.
How do you protect yourself?
- Learn to identify the scam. Become familiar with the common characteristics and red flags and the ruses (listed right), as well as the ongoing twists and developments.
- Keep on top of new variations that the Law Society notifies the profession about. Make it a priority to read the email notices the Law Society sends. And for your non-lawyer staff who may also need to “keep on top,” sign them up for the Law Society’s RSS feeds so that they receive the same email fraud alerts that you do. Staff can also sign up for free electronic subscriptions to the Benchers’ Bulletin (includes Notices to the Profession and E-Brief).
- Review names and documents for some of the different names and documents fraudsters have used in BC.
- Take steps to manage the risk.
- As insurance is available on the commercial market that responds to this risk, talk to your broker (some protection is also provided to you through Part C of the Your Policy).
And find out what to do if you suspect a new client may be a scamster, or worse, you’ve been caught.